EU Finalizes Controversial Smart Contract Kill-Switch Rules, Advances User Data Control and Data Portability Laws

Legislative negotiators from the European Union have reached an agreement on the Data Act, which includes provisions on smart contracts. The Web3 community has expressed concerns about the potential negative impact of these rules on decentralized transactions governed by immutable code. While the final legal draft has not been released, the text on smart contracts has reportedly been tightened to focus specifically on the execution of contractual clauses in the context of data sharing. The European Commission has dismissed fears that the law will kill off existing smart contracts, but concerns remain about its compatibility with public, permissionless blockchains. The Data Act will need to be voted on by the European Parliament and Council to become law.